Guest commentary: Changes mean problems for state employees

Here’s a tip for state workers once new health plan changes take effect: Don’t break a leg. It could cost you a month’s pay.

The Office of Group Benefits, which insures thousands of state workers, retired state workers and dependents, is spending more than it takes in. The burn rate is an eye-watering $16.1 million a month.

OGB once balanced its books with ease, building up a healthy reserve fund that held half a billion dollars in 2012. More recently, OGB dropped premiums and began living off its fund balance. Why? The reason is simple. The state needed money to balance the budget. Plan members and state agencies share premium costs. The lower the premiums, the less money state agencies have to find for their share.

Now the reserve fund is hovering on empty. By the end of this fiscal year, it will have a zero balance.

Commissioner of Administration Kristy Nichols seems to think the spending spree is a good thing. “A reserve fund is similar to a bank account set aside for a rainy day,” she recently wrote. “If the fund is too low, you run the risk of not being able to cover unexpected expenses. If the fund is too high, your money sits idly and doesn’t work for you. Considering that the state funds 75 percent of member premiums through taxpayer dollars, letting that large of a balance sit unused meant that those funds weren’t being used for other important projects.”

The solution on the table for stemming the drain is to pinch state workers’ pocketbooks. Deductibles will go up. Out-of-pocket maximums will increase. Limits will be placed on hospice care. Vision coverage will pretty much disappear. If you like your plan, that’s too bad. You’re not keeping it.

The overall goal is to generate $44.7 million in health plan savings and $69 million in prescription drug savings. For state workers, out-of-pocket costs are about to skyrocket 47 percent. That’s bad news for families trying to save for retirement and their kids’ college educations.

As the nonpartisan Louisiana Legislative Fiscal Office put it: “By adding and/or increasing deductibles, increasing the out-of-pocket maximum and increasing copayments and coinsurance, the new health plan offerings will significantly reduce the cost to OGB, while the OGB member pays more for their medical services. … All new health plan options will have a deductible increase.”

That’s a big change for HMO participants — and the majority of OGB members are in the HMO plan. Currently, they pay no deductible.

Exact details on health plan changes won’t be known until October, when documents are released for the five plan options. However, the LFO ran though possible scenarios. The bottom line: Don’t break a leg or so much as a fingernail.

Under one scenario, the LFO imagined what would happen if an active single member broke his foot at the beginning of the year. Emergency surgery is required. Three days in the hospital are prescribed. Home health services are scheduled. The entire bill totals $20,000.

With the old HMO plan, the patient would face $300 in out-of-pocket expenses, about the same cost as a couple of trips to the grocery store. Under the new Open Access Plan, out-of-pocket expenses suddenly climb to $2,900, or about the same as a down payment on a new car.

This isn’t helping Louisiana families. This is putting the burden for bad budget practices on Louisiana families.

John Kennedy is Louisiana’s state treasurer.